Just when you thought things were cooling off between the US and China, Washington goes and pokes the dragon.
Days after the latest trade talks were indefinitely postponed, the United States announced further restrictions on Huawei Technologies, preventing the sale of any US-developed or produced chips to the Chinese company without a specific licence.
On top of that, 38 affiliate companies with links to Huawai have been put on a trade blacklist, further tightening the noose around tech firm. This as Secretary of State Mike Pompeo claimed that Huawai had ‘continuously tried to evade’ the constraints announced back in May.
Their trade war anxieties reignited, the reaction from the European indices was predictable. The DAX dropped 100 points, sinking below 12850, while the CAC fell 0.9%, leaving it the wrong side of 4950.
The FTSE was the worst hit, shedding 1.1% to return to 6070. It didn’t help that the pound rose half a percent against the dollar and 0.2% against the euro. Nor was sentiment aided by news of 7000 job cuts at Marks & Spencer, the latest high street staple to announce a stark culling of employees.
As for the Dow Jones, currently it is heading for a 0.3%, following a similar drop at yesterday’s close. That would push the US index further away from 6-month highs it struck last week, taking it back to 27760.
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